Thank you, Mr. Chair.
Good morning, members of the committee.
My name is David Goldstein. I'm the president and CEO of the Tourism Industry Association of Canada, and it's my pleasure to appear before you today on behalf of the National Roundtable on Travel and Tourism and the 617,000 Canadians who work in this $74 billion sector.
Our industry is not a regional industry. It is a 308-riding job strategy, with the smallest number of people in Nunavut, where 1,200 participate in this industry, and the greatest number of people in Niagara Falls, where more than 16,000 participate in this industry. Later, if you have questions, I can break it out by your riding as well.
Before I begin, let me take a moment to recognize the recent important step, the announcement of the federal tourism strategy. This whole-of-government approach will help provide alignment between the 15 federal departments and agencies that touch on our industry. We hope this will spur investment growth and create jobs across the country at a time when job creation is a top priority for Canadians.
We have three recommendations in our submission. We will focus on one today, which is our aviation cost structure here in Canada.
International tourism is one of the fastest growing industries in the world, and Canada is blessed with the basics as a travel destination. We deserve more than our share of that growing export market. However, we have fallen from seventh in the world in international arrivals in 2002 to fifteenth last year.
The key impediment to our creating growth at this time is an aviation cost structure that fundamentally creates barriers to access. This taxes us out of contention for international visitors and drives Canadians south of the border. All of this contributes to the $14 billion trade deficit in this sector. Canada, especially post-9/11, has become a fly-to destination, and price competitiveness is vital to attracting visitors.
Sadly, Canada is ranked 125th in the world in its cost competitiveness when it comes to taxes and fees on our airline tickets. If you want a clear example of how this affects us, you need only look at the number of Canadians who are cross-border shopping for their flights. Last year, 21% of Canadian leisure travellers chose to fly from U.S. airports. Airlift is oxygen to our sector, and our current cost structure is so onerous that it impedes our ability to attract that vital airlift. This discourages competition and drives up prices for air tickets, both to Canada and within Canada.
Most governments around the world treat airports as economic spark plugs that catalyze growth. We have fallen into the trap of treating our airports as toll booths. Airport ground rents, the air traveller security charge, navigation charges, payments to municipalities, and aviation fuel surcharges are all piled into the final price of the ticket. I refer to these as the club sandwich of fees and taxes that we impose on our users and end up adding upwards of $160 to the cost of an overseas ticket. That is in difference to what that same ticket would cost in the United States.
So here is our question. Do we want to be a player in one of the fastest growing sectors of the global economy, or do we want to be the B team or the “also ran”?
As a result, our recommendation to the committee is for a prompt and comprehensive review of the aviation cost structure in Canada, with a view to achieving a fair tax and regulatory regime that would allow us to better compete for international travellers.
Before I end, I will say that we too recognize this is an era of fiscal restraint. As I stated earlier, one of the challenges we face as a sector is that there are 15 different departments and crown agencies that impact our sector. Through the strategic review exercise, if all departments had to take a 5% or 10% cut, and therefore we ended up being the low industry on the totem pole in each of those departments, there could be a disproportionate impact on our sector. We have written to the federal finance minister on this issue and we hope it is part of your deliberations as part of this process as well.
I thank you for your time, and I look forward to your questions.